Securities Law & Instruments

Headnote

Under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations a registered firm must not permit an individual to act as a dealing, advising or associate advising representative of the firm if the individual is registered as a dealing, advising or associate advising representative of another firm registered in any jurisdiction of Canada --Filers are exempted from this restriction to allow the filers to permit an individual to act as an advising representative for each of the filers -- Filers are affiliated firms that plan to amalgamate -- Exemption is subject to terms and conditions and is for only a limited period pending the amalgamation.

Applicable Legislative Provisions

Multilateral Instrument 11-102 Passport System, s. 4.7.

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 4.1, 15.1.

May 26, 2016

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF FI CAPITAL LTD., RAE AND LIPSKIE INVESTMENT COUNSEL INC., AND RICHARD VANDERMEY (collectively, the Filers)

DECISION

Background

The principal regulator in the Jurisdiction (the Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdiction (the Legislation) for an exemption from the restriction under paragraph 4.1(1)(b) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) to allow each of the registered firms, FI Capital Ltd. (FI Capital) and Rae and Lipskie Investment Counsel Inc. (R&L), to permit Richard Vandermey (Vandermey) to act as an advising representative of the registered firm while Vandermey is also registered as an advising representative of the other registered firm in any jurisdiction of Canada (the Exemption Sought)

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by FI Capital in British Columbia, Alberta, Saskatchewan, Manitoba, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador, and that MI 11-102 is intended to be relied upon by R&L in British Columbia.

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102 and NI 31-103 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers:

1. R&L is registered under the securities legislation of each of Ontario and British Columbia as an adviser in the category of "portfolio manager". R&L is also registered under the securities legislation of Ontario as an investment fund manager. The head office of R&L is located in Ontario.

2. FI Capital is registered under the securities legislation of each of Ontario, Alberta, British Columbia, Saskatchewan, Manitoba, Newfoundland and Labrador, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador (the Jurisdictions) as an adviser in the category of "portfolio manager," as a dealer in the category of "exempt market dealer," and as investment fund manager. The head office of FI Capital is located in Ontario.

3. Neither R&L nor FI Capital is in default of any requirement of the securities legislation of any jurisdiction of Canada.

4. On May 5, 2016, R&L acquired all of the issued and outstanding common shares of FI Capital and, as a result, FI Capital is now a wholly owned subsidiary of R&L.

5. In the very near future, R&L intends to amalgamate with FI Capital to form an amalgamated corporation (the Amalgamation). The precise date of the Amalgamation has not yet been determined, but it is anticipated its completion may take up to six months due to, among other things, the fact that R&L and FI Capital are not incorporated under the same incorporating statute.

6. Kenneth Rae and Brian Lipskie are the directors of each of the Filers.

7. Kenneth Rae is registered under the securities legislation of each of Ontario and British Columbia as the ultimate designated person of R&L. He is also registered under the securities legislation of the Jurisdictions as the ultimate designated person of FI Capital.

8. Brian Lipskie is registered under the securities legislation of each of Ontario and British Columbia as the chief compliance officer of R&L. He is also registered under the securities legislation of the Jurisdictions as the chief compliance officer of FI Capital.

9. Vandermey is now registered under the securities legislation of Ontario as an advising representative of R&L. If the Exemption Sought is granted, he will apply to be registered as an advising representative of FI Capital under the securities legislation of each of the Jurisdictions in order to also act as an adviser on behalf of FI Capital to clients of FI Capital residing in those Jurisdictions until the Amalgamation is completed.

10. Each of R&L and FI Capital has in place appropriate compliance and supervisory policies and procedures to monitor the conduct of Vandermey and to address any conflicts of interest that may arise as a result of him being registered to act on behalf of each of R&L and FI Capital (the Dual Registration).

11. There are valid business reasons for the Dual Registration, including the fact that FI Capital now has only one individual who is registered to act as an advising representative on behalf of FI Capital and that individual is resigning effective May 31, 2016.

12. R&L and FI Capital do not act for any of the same clients, and they do not anticipate having any of the same clients before the Amalgamation.

13. Management of R&L and FI Capital will ensure that Vandermey will have sufficient time and resources to meet his obligations to each of R&L and FI Capital, and their respective clients.

14. In order to minimize any potential for client confusion, each of the Filers will disclose to each of the clients of the Filer for which Vandermey acts as an adviser on behalf of the Filer the nature of his relationship with the Filers, before Vandermey acts as an adviser to the client on behalf of the Filer after obtaining his Dual Registration.

Decision

The Decision Maker is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Maker under the Legislation is that the Exemption Sought is granted provided that:

(a) the representations in paragraphs 4, 6, 7, 8, 10, 13 and 14 remain true; and

(b) this exemption will terminate upon the earlier of the following:

(i) the completion of the Amalgamation; and

(ii) the end of the day that is six months after the date of this decision.

"Marrianne Bridge"
Deputy Director
Compliance and Registrant Regulation
Ontario Securities Commission